University presidents
serve many masters, but presidents of public universities serve an additional
master unique from all the rest. This master makes greater demands, is less
flexible, is less predictable, and often begrudges its support of the
university. This master is the state, and public universities would do well to
minimize its impact.

Politicians,
taxpayers, contributing alumni, grantors and students all want some level of
control over university activities and priorities. The state is particularly
difficult for universities to deal with because of its unique nature. Unlike the
other parties, the money offered universities by the state comes from many
individuals, many times against their will, via taxation. These taxpayers in
turn make broad demands of universities, forcing them to change even the most
fundamental policies. Last fall’s passage of Proposal 2 is an example of this,
with voters demanding that state universities eliminate race- and gender-based
admissions criteria.

It is true that other
donors may make demands of universities, but in almost every case it is
negotiable. State demands are not. Typically, a donor is making demands only
regarding the particular use of the donated money, whereas the state often makes
demands on every area of university operations.

The state also is an
unpredictable funding source. Budget and political concerns can dramatically
change funding with little notice, placing continual stress on university
administrators. When university presidents court a potential private donor, they
know they must please that donor. When they seek funds from a lawmaker, they
find themselves trying to please someone who is also trying to please the
roughly 90,000 masters in his or her district — not to mention the lawmaker’s
legislative colleagues and all of their constituents.

Again, unlike private
donors, the state policymakers placing demands on the university may even be
opposed to the institution altogether. This often leaves university presidents
confused about who really is in charge, and certainly leaves the most direct
customer — the student — with diminished influence on the education he or she is
purchasing.

In contrast,
businesses know the customer is in charge. Businesses must respond to market
demands; the customer is the sole bearer of the money that businesses need to
succeed. The market’s price system lets customers and businesses clearly see how
well they are meeting each other’s needs.

Public universities do
not operate under the same conditions.

According to the
Michigan House Fiscal Agency, about 46 percent of Michigan public universities’
general funds come from sources other than tuition. Of the remaining 54 percent
that comes from tuition, students pay less than half (47 percent) themselves,
often with low-interest federal loans. That means only about 25 percent of the
cost is paid directly by students. The rest comes from state funding, grants,
aid and scholarships. Naturally, universities are less concerned with students
than with the major sources of their funding — primarily state and federal
government, donors and private and public research grants.

This complex funding
structure has made universities less responsive to students. It also has made
students less responsive to universities. When someone else is paying the bulk
of a student’s tuition, the student is less likely to be keenly aware of waste,
inefficiency and poor educational practices at the university. The lack of a
fully visible price makes it impossible for students to know if they’re getting
a good deal and for universities to know if they’re effectively meeting
students’ needs.

Michigan’s 15 public
universities should wean themselves from state funding. Simply by forgoing
annual state funding increases, or even accepting small decreases, state
universities could slowly regain their academic independence and give students
more control.

Many people assume
that less state funding means automatic tuition increases and fewer college
grads, ultimately leading to slower long-term economic growth. This is not
necessarily the case. Ohio University economist Dr. Richard Vedder has shown in
his book "Going Broke by Degree" that
more state funding does not lower tuition or create economic growth; indeed
state funding increases may well have the opposite effect.

Universities are
supposed to serve a vital role in a free society — the uninhibited pursuit and
dissemination of knowledge. By gradually making government a less important
source of funding, Michigan’s public universities can free themselves from
trying to please politicians and focus more on students; in turn, students might even focus more on them.

Isaac M. Morehouse is director of
Students for a Free Economy, a project of the Mackinac Center for Public
Policy, a research and educational institute headquartered in Midland, Mich.
Permission to reprint in whole or in part is hereby granted, provided that the
author and the Center are properly cited.